<PAGE>

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                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                               ------------------

                                    FORM 10-Q

[ X ]      Quarterly report pursuant to Section 13 or 15(d) of
           the Securities Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998

OR

[     ]     Transition report pursuant to Section 13 or 15(d)
            of the Securities Exchange Act of 1934

                        COMMISSION FILE NUMBER: 001-11807

                           ---------------------------

                                UNIFY CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          Delaware                                    94-2710559
------------------------------             -------------------------------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION)                        NUMBER)


                          181 METRO DRIVE, THIRD FLOOR
                           SAN JOSE, CALIFORNIA 95110
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                            TELEPHONE: (408) 346-1100
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                                    YES   X    NO
                                         ---       ---

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

    8,437,296 shares of Common Stock, $0.001 par value, as of August 31, 1998

-------------------------------------------------------------------------------

<PAGE>

                                UNIFY CORPORATION
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                NUMBER
                                                                                                ------

<S>                   <C>                                                                      <C>
 PART I.               FINANCIAL INFORMATION

 Item 1.               Financial Statements

                       Condensed Consolidated Balance Sheets as of
                          July 31, 1998 and April 30, 1998................................         3

                       Condensed Consolidated Statements of Operations for
                           the three months ended July 31, 1998 and 1997..................         4

                       Condensed Consolidated Statements of Cash Flows
                           for the three months ended July 31, 1998 and 1997..............         5

                       Notes to Condensed Consolidated Financial Statements...............         6

 Item 2.               Management's Discussion and Analysis of
                           Financial Condition and Results of Operations..................         8


 PART II.              OTHER INFORMATION

 Item 6.               Exhibits and Reports on Form 8-K....................................        13

 SIGNATURE  ...............................................................................        14

</TABLE>











                                                    2


<PAGE>


PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

                                                   UNIFY CORPORATION
                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                     (IN THOUSANDS)
<TABLE>
<CAPTION>


                                                                         July 31,          April 30,
                                                                           1998              1998
                                                                         ---------         ---------
                                                                        (unaudited)       (audited)
<S>
ASSETS                                                                  <C>               <C>
Current assets:
   Cash and cash equivalents                                             $  5,297          $  5,279
   Short-term investments                                                   5,149             5,460
   Accounts receivable, net                                                 4,884             5,568
   Prepaid expenses and other current assets                                  824               779
                                                                         --------          --------
      Total current assets                                                 16,154            17,086

Property and equipment, net                                                 1,858             1,925
Other assets                                                                   68                88
                                                                         --------          --------
      Total assets                                                       $ 18,080          $ 19,099
                                                                         --------          --------
                                                                         --------          --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                                     $     --          $     18
   Accounts payable                                                         1,099             1,041
   Amounts due to minority interest stockholders                              527               756
   Accrued compensation and related expenses                                1,469             1,889
   Other accrued liabilities                                                2,888             3,076
   Deferred revenue                                                         3,114             3,745
                                                                         --------          --------
      Total current liabilities                                             9,097            10,525

Long-term debt, net of current portion                                          3                 4
Minority interest                                                             239               275

Stockholders' equity:
   Common stock                                                                 8                 8
   Additional paid-in capital                                              53,631            53,474
   Notes receivable from stockholders                                        (219)             (216)
   Cumulative translation adjustments                                        (487)             (521)
   Accumulated deficit                                                    (44,192)          (44,450)
                                                                         --------          --------
      Total stockholders' equity                                            8,741             8,295
                                                                         --------          --------
      Total liabilities and stockholders' equity                         $ 18,080          $ 19,099
                                                                         --------          --------
                                                                         --------          --------

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                        3


<PAGE>
                                               UNIFY CORPORATION
                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                              Three Months Ended July 31,
                                                              ---------------------------
                                                                1998                1997
                                                              --------            --------
<S>                                                           <C>                 <C>
 Revenues:
   Software licenses                                           $ 4,242             $ 2,869
   Services                                                      2,418               2,265
                                                              --------            --------
 Total revenues                                                  6,660               5,134
                                                              --------            --------

 Cost of revenues:
   Software licenses                                               226                 233
   Services                                                      1,053               1,081
                                                              --------            --------
      Total cost of revenues                                     1,279               1,314
                                                              --------            --------

 Gross margin                                                    5,381               3,820
                                                              --------            --------

 Operating expenses:
   Product development                                           1,449               1,448
   Selling, general and administrative                           3,653               4,560
                                                              --------            --------
      Total operating expenses                                   5,102               6,008
                                                              --------            --------

      Income (loss) from operations                                279              (2,188)
 Other income, net                                                  23                  60
                                                              --------            --------
      Income (loss) before income taxes                            302              (2,128)
 Provision for income taxes                                        (44)                (47)
                                                              --------            --------
      Net income (loss)                                        $   258             $(2,175)
                                                              --------            --------
                                                              --------            --------

 Net income (loss) per share, basic and diluted                $  0.03             $ (0.27)
                                                              --------            --------
                                                              --------            --------

 Shares used in computing net income (loss) per share:

   Basic                                                         8,388               8,180
                                                              --------            --------
                                                              --------            --------
   Diluted                                                       8,524               8,180
                                                              --------            --------
                                                              --------            --------

</TABLE>






     See accompanying notes to condensed consolidated financial statements.

                                        4

<PAGE>

                               UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                        Three Months  Ended July 31,
                                                                        ----------------------------
                                                                          1998                1997
                                                                        -------               -------
<S>                                                                    <C>                   <C>

 Cash flows from operating activities:

   Net income (loss)                                                    $   258               $(2,175)
   Reconciliation of net income (loss) to net cash used
   in operating activities:
      Depreciation                                                          276                   264
      Provision for losses on accounts receivable                           113                    42
      Minority interest                                                     (36)                  (63)
      Liquidation of Benelux subsidiary                                      --                   136
   Changes in operating assets and liabilities:
         Accounts receivable                                                510                   447
         Prepaid expenses and other current assets                          (60)                   77
         Accounts payable                                                    69                   275
         Amounts due to minority interest stockholders                     (182)                  (29)
         Accrued compensation and related expenses                         (411)                 (371)
         Other accrued liabilities                                         (180)                 (675)
         Deferred revenue                                                  (594)                 (502)
                                                                        -------               -------
            Net cash used in operating activities                          (237)               (2,574)
                                                                        -------               -------
 Cash flows from investing activities:
   Purchases of available-for-sale securities                            (1,250)               (3,543)
   Sales of available-for-sale securities                                 1,561                 3,998
   Purchases of property and equipment                                     (212)                 (218)
   Other assets                                                              20                   166
                                                                        -------               -------
            Net cash provided by investing activities                       119                   403
                                                                        -------               -------


 Cash flows from financing activities:
   Principal payments under debt obligations                                (19)               (2,260)
   Proceeds from issuance of common stock, net                              157                   327
   Accrual of interest on notes receivable from stockholders                 (3)                   (2)
                                                                        -------               -------
            Net cash provided by (used in) financing activities             135                (1,935)
                                                                        -------               -------

 Effect of exchange rate changes on cash                                      1                   (64)
                                                                        -------               -------
 Net increase (decrease) in cash and cash equivalents                        18                (4,170)
 Cash and cash equivalents, beginning of period                           5,279                 9,513
                                                                        -------               -------
 Cash and cash equivalents, end of period                               $ 5,297               $ 5,343
                                                                        -------               -------
                                                                        -------               -------

 Supplemental schedule of noncash investing and financing activities:
 Cash paid during the period for:

   Interest                                                             $    26               $   250
                                                                        -------               -------
                                                                        -------               -------
   Income taxes                                                         $    32               $    31
                                                                        -------               -------
                                                                        -------               -------

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                        5

<PAGE>

                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The condensed consolidated financial statements have been prepared by 
Unify Corporation (the "Company") pursuant to the rules and regulations of 
the Securities and Exchange Commission ("SEC"). While the interim financial 
information contained in this filing is unaudited, the financial statements 
presented reflect all adjustments (consisting only of normal recurring 
adjustments) which the Company considers necessary for a fair presentation of 
the financial position as of July 31, 1998 and April 30, 1998, the results of 
operations for the three months ended July 31, 1998 and 1997, and the cash 
flows for the three months ended July 31, 1998 and 1997. The results for 
interim periods are not necessarily indicative of the results to be expected 
for the entire fiscal year. These financial statements should be read in 
conjunction with the Consolidated Financial Statements and Notes thereto, 
together with Management's Discussion and Analysis of Financial Condition and 
Results of Operations, which are included in the Company's Annual Report on 
Form 10-K for the year ended April 30, 1998 as filed with the SEC.

2.   EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of 
the basic and diluted earnings per share computations for the periods 
indicated:

<TABLE>
<CAPTION>

                                                                     Three Months Ended  July 31,
                                                                     ----------------------------
                                                                      1998                 1997
                                                                     -------              -------
        <S>                                                         <C>                  <C>
         NET INCOME (LOSS)  (NUMERATOR):
         Net income (loss), basic and diluted                        $   258              $(2,175)
                                                                     -------              -------
                                                                     -------              -------
         SHARES  (DENOMINATOR):
         Weighted average shares of common stock
              outstanding, basic                                       8,388                8,180
         Weighted average common equivalent shares
              outstanding                                                136                   --
                                                                     -------              -------
         Weighted average shares of common stock
              outstanding, diluted                                     8,524                8,180
                                                                     -------              -------
                                                                     -------              -------

         PER SHARE AMOUNT:
         Net income (loss) per share, basic and diluted              $  0.03              $ (0.27)
                                                                     -------              -------
                                                                     -------              -------

         ANTIDILUTIVE SHARES:                                            433                  706
                                                                     -------              -------
                                                                     -------              -------

</TABLE>




                                                    6

<PAGE>

                       UNIFY CORPORATION
     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.   COMPREHENSIVE INCOME

     Effective May 1, 1998, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This 
statement requires that all items recognized under accounting standards as 
components of comprehensive income be reported in an annual financial 
statement that is displayed with the same prominence as other annual 
financial statements. This statement also requires that an entity classify 
items of other comprehensive income by their nature in an annual financial 
statement. For example, other comprehensive income includes foreign currency 
translation adjustments. Annual financial statements for prior periods will 
be reclassified, as required. The Company's total comprehensive income (loss) 
was as follows:


<TABLE>
<CAPTION>

                                                Three Months Ended July 31,
                                               -----------------------------
                                                 1998                 1997
                                                -------              -------
        <S>                                    <C>                  <C>
         Net income (loss)                      $   258              $(2,175)
         Other comprehensive loss, net of tax       (34)                 (71)
                                                -------              -------
         Total comprehensive income (loss)      $   224              $(2,246)
                                                -------              -------
                                                -------              -------

</TABLE>

NEW ACCOUNTING PRONOUNCEMENT

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 
133, "Accounting for Derivative Instruments and Hedging Activities." This 
statement establishes accounting and reporting standards for derivative 
instruments and hedging activities. This statement is effective for all 
fiscal quarters of fiscal years beginning after June 15, 1999. The Company 
has not yet determined the impact of SFAS No. 133 on the Company's financial 
statements.

                                        7

<PAGE>

                                UNIFY CORPORATION

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS

     THE DISCUSSION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS 
FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF 
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING 
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT 
THE SOFTWARE INDUSTRY AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S 
MANAGEMENT. WORDS SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", 
"BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR 
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE 
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO 
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; 
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR 
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND 
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH HEREIN UNDER 
"VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY 
RESULTS" AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K UNDER "BUSINESS - 
RISK FACTORS." UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION 
TO UPDATE PUBLICLY ANY FORWARD- LOOKING STATEMENTS, WHETHER AS A RESULT OF 
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD 
CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE 
COMPANY FILES FROM TIME TO TIME WITH THE SEC, PARTICULARLY THE COMPANY'S 
ANNUAL REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND ANY CURRENT 
REPORTS ON FORM 8-K.

     The following discussion should be read in conjunction with the 
unaudited Condensed Consolidated Financial Statements and Notes thereto in 
Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited 
Consolidated Financial Statements and Notes thereto, together with 
Management's Discussion and Analysis of Financial Condition and Results of 
Operations, which are included in the Company's Annual Report on Form 10-K 
for the year ended April 30, 1998 as filed with the SEC.

RESULTS OF OPERATIONS

REVENUES

     The Company's strategy is to aggressively market and enhance its 
graphical product, Unify VISION. The Company continues to support its 
extensive installed base of Unify DataServer and Unify ACCELL character 
products, which the Company believes represents a significant source of 
potential customers for Unify VISION. The Company also generates significant 
revenues from services, including customer maintenance, consulting and 
training. The following table sets forth revenues from licenses of its 
graphical and character products and from services for the periods indicated:

                                        8

<PAGE>


                                UNIFY CORPORATION

<TABLE>
<CAPTION>
                                        Three Months Ended July 31,
                                        ---------------------------
                                         1998                1997
                                        ------              ------
        <S>                            <C>                 <C>
         License revenues:
            Graphical                   $2,150              $1,257
            Character                    2,092               1,612
                                        ------              ------
               Total license revenues    4,242               2,869
         Services revenues               2,418               2,265
                                        ------              ------
               Total revenues           $6,660              $5,134
                                        ------              ------
                                        ------              ------

</TABLE>

     Total revenues for the quarter ended July 31, 1998 increased 30% over 
the same quarter of the prior year to $6.7 million. Graphical license 
revenues of $2.2 million in the first quarter of fiscal 1999 were 71% higher 
than the same quarter of the prior year. The growth in graphical license 
revenues was primarily attributable to several sales in the $250,000 to 
$500,000 range; fewer similar sales occurred in the same quarter of fiscal 
1998. Because of factors such as those described in "Volatility of Stock 
Price and General Risk Factors Affecting Quarterly Results," especially 
continuing longer sales cycles associated with enterprise-level sales 
transactions, there can be no assurance that the Company will be able to 
maintain the same level of graphical license revenues as recorded for the 
quarter ended July 31, 1998. Character license revenues increased 30% over 
the same quarter of the prior year to $2.1 million, reflecting normal 
fluctuation in the level of character license revenues. Service revenues 
remained relatively constant in the first quarter of fiscal 1999 as compared 
to the same quarter of the previous year.

     International revenues were comparable at 52% and 50% of total revenues 
in the quarters ended July 31, 1998 and 1997, respectively.

COST OF REVENUES

     Cost of software licenses were stable in absolute dollars and 
represented 5% and 8% of license revenues for the quarters ended July 31, 
1998 and 1997, respectively. The decrease in cost of software licenses as a 
percentage of license revenues in the fiscal 1999 quarter was due to 
economies of scale associated with the growth in license revenues.

     Cost of services were comparable at $1.1 million, or 44% and 48% of 
service revenues in the first quarters of fiscal 1999 and 1998, respectively. 
Within total services, the levels of customer maintenance and consulting and 
training revenues and expenses were also stable in the first quarter of 
fiscal 1999 as compared with the same quarter of the prior year. As the 
Company continues to increase its emphasis on providing comprehensive 
application development solutions in fiscal 1999 it expects that consulting 
service costs may increase.

                                        9

<PAGE>

                                UNIFY CORPORATION

PRODUCT DEVELOPMENT

     Product development expenses were stable at $1.4 million and represented 
22% and 28% of total revenues for the quarters ended July 31, 1998 and 1997, 
respectively. The decrease in product development expenses as a percentage of 
total revenues was due to the growth in first quarter fiscal 1999 license 
revenues as compared to the same quarter of the prior year. The Company 
believes that substantial investment in product development is critical to 
maintaining technological leadership and therefore intends to continue to 
devote significant resources to product development.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative ("SG&A") expenses for the quarter 
ended July 31, 1998 decreased to $3.7 million, or 55% of total revenues, as 
compared to $4.6 million, or 89% of total revenues, for the same quarter of 
the prior year. SG&A expenses decreased in absolute dollars compared to the 
same period of the prior year as the Company continued to closely manage 
expenses. The decrease in SG&A expenses as a percentage of total revenues was 
attributable to the decrease in absolute dollars as well as to the increase 
in first quarter fiscal 1999 license revenues as compared to the same quarter 
of the prior year. The Company expects that total SG&A expenses may fluctuate 
from quarter to quarter primarily because of variability in marketing program 
spending and sales commission expense.

PROVISION FOR INCOME TAXES

     The Company recorded tax provisions for the quarters ended July 31, 1998 
and 1997 which related primarily to foreign income tax withholding on 
software license royalties paid to the Company by certain foreign licensees. 
For the same periods, the Company recorded no federal or state income tax 
provisions as the Company had substantial net operating loss carryforwards.

                                       10

<PAGE>

                                UNIFY CORPORATION

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

     The Company's common stock price has been and is likely to continue to 
be subject to significant volatility. A variety of factors could cause the 
price of the Company's common stock to fluctuate, perhaps substantially, 
including: announcements of developments related to the Company's business; 
fluctuations in the Company's quarterly operating results and order levels; 
general conditions in the computer industry or the worldwide economy; 
announcements of technological innovations; new products or product 
enhancements by the Company or its competitors; changes in financial 
estimates by securities analysts; developments in patent, copyright or other 
intellectual property rights; and developments in the Company's relationships 
with its customers, distributors and suppliers. In addition, in recent years 
the stock market in general, and the market for shares of equity securities 
of many high technology companies in particular, has experienced extreme 
price fluctuations which have often been unrelated to the operating 
performance of those companies. Such fluctuations may adversely affect the 
market price of the Company's common stock.

     The Company's quarterly operating results have varied significantly in 
the past, and the Company expects that its operating results are likely to 
vary significantly from time to time in the future. Such variations result 
from, among other factors, the following: the size and timing of significant 
orders and their fulfillment; demand for the Company's products; the number, 
timing and significance of product enhancements and new product announcements 
by the Company and its competitors; ability of the Company to attract and 
retain key employees; seasonality; changes in pricing policies by the Company 
or its competitors; realignments of the Company's organizational structure; 
changes in the level of the Company's operating expenses; changes in the 
Company's sales incentive plans; budgeting cycles of the Company's customers; 
customer order deferrals in anticipation of enhancements or new products 
offered by the Company or its competitors; product life cycles; product 
defects and other product quality problems; the results of international 
expansion; currency fluctuations; and general domestic and international 
economic and political conditions. Because a significant portion of the 
Company's revenues have been, and the Company believes will continue to be, 
derived from orders ranging in size from several hundred thousand dollars to 
approximately $1 million, the timing of such orders and their fulfillment has 
caused and is expected to continue to cause material fluctuations in the 
Company's operating results, particularly on a quarterly basis.

     Due to the foregoing factors, quarterly revenues and operating results 
are difficult to forecast. Revenues are also difficult to forecast because 
the market for client/server and Internet application development software is 
rapidly evolving, and the Company's sales cycle, from initial evaluation to 
purchase and the provision of maintenance services, is lengthy and varies 
substantially from customer to customer. In particular, with the fiscal 1997 
release of Unify VISION 3.0 and VISION/Web as well as the May 1998 release of 
VISION 4.0, the Company has experienced new opportunities to compete for 
larger, enterprise-level sales transactions. These transactions have even 
longer sales cycles than the Company has experienced in the past. Because the 
Company normally ships products within a short time after it receives an 
order, it typically does not have any material backlog. As a result, to 
achieve its quarterly revenue objectives, the Company is dependent upon 
obtaining orders in any given quarter for shipment in that quarter. 
Furthermore, because many customers place orders toward the end of a fiscal

                                       11

<PAGE>


                                UNIFY CORPORATION

quarter, the Company generally recognizes a substantial portion of its 
revenues at the end of a quarter. As the Company's expense levels are based 
in significant part on the Company's expectations as to future revenues and 
are therefore relatively fixed in the short term, if revenue levels fall 
below expectations operating results are likely to be disproportionately 
adversely affected.

     The Company also expects that its operating results will be affected by 
seasonal trends. The Company believes that, in general, it is likely it will 
experience relatively higher revenues in fiscal quarters ending April 30 and 
relatively lower revenues in fiscal quarters ending July 31 as a result of 
efforts by its direct sales force to meet fiscal year-end sales quotas. The 
Company also anticipates that it may experience relatively weaker demand in 
fiscal quarters ending July 31 and October 31 as a result of reduced business 
activity in Europe during the summer months.

     In particular, due to the foregoing factors and due to longer sales 
cycles associated with Unify VISION 4.0, the operating results of the Company 
for the quarter ending October 31, 1998 are subject to significant 
uncertainty. The Company has incurred net losses in five of the last eight 
fiscal quarters and in each of the last five fiscal years. Although the 
Company recorded small operating profits for the quarters ended January 31, 
1998, April 30, 1998 and July 31, 1998, there can be no assurance regarding 
the Company's continued profitability.

LIQUIDITY AND CAPITAL RESOURCES

     At July 31, 1998, the Company had cash, cash equivalents and short-term 
investments of $10.4 million, compared to $10.7 million at April 30, 1998. 
Working capital increased to $7.1 million at July 31, 1998 from $6.6 million 
at April 30, 1998.

     The Company's operating activities used cash of $0.2 million during the 
three months ended July 31, 1998. Investing activities during the period 
generated cash of $0.1 million, consisting principally of net sales of short 
term investments of $0.3 million offset by equipment purchases of $0.2 
million. Cash provided by financing activities during the period was $0.1 
million, representing primarily proceeds from issuance of common stock.

     The Company believes that current cash, cash equivalents and short-term 
investments will be sufficient to meet its cash requirements during the next 
12 months. Thereafter, depending on its operating results, the Company may 
require additional equity or debt financing to meet its working capital or 
capital equipment requirements. There can be no assurance that additional 
financing will be available when required or, if available, that it will be 
on terms satisfactory to the Company.

                                       12

<PAGE>

                                UNIFY CORPORATION

PART II.     OTHER INFORMATION

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

               (a)    Exhibits

                      Exhibit 27  Financial Data Schedule

               (b)    Reports on Form 8-K

                      The Company filed no reports on Form 8-K
                      during the quarter ended July 31, 1998.

                                       13

<PAGE>


                                UNIFY CORPORATION

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

Date:   September 9, 1998           Unify Corporation
                                    (REGISTRANT)



                                    By:

                                    Reza Mikailli
                                    ------------------------------------------
                                    Reza Mikailli
                                    President, Chief Executive Officer, Acting
                                    Vice President, Finance and Administration,
                                    and Director  (Principal Executive,
                                    Financial and Accounting Officer)

                                       14